TIGHT OIL: A SOLUTION TO U.S. IMPORT DEPENDENCE?

These are heady times for U.S. oil bulls, with projections of production from tight oil rising to five million barrels per day, or more, by 2019, from essentially nothing just a few years ago. This compares to total U.S. oil production of less than seven million barrels per day as recently as 2008. Declarations of near term “energy independence” are commonplace in the main stream media.

Notwithstanding the substantial contribution of this new supply made possible by the combination of multi-stage hydraulic fracturing and horizontal drilling, the U.S. burns more than 18 million barrels per day. Even five million barrels per day of tight oil production is highly unlikely to free the U.S. from the need for imported oil. Furthermore, tight oil fields are characterized by high decline rates and the need for continual high rates of drilling to maintain production levels. The long term sustainability of tight oil production is thus of paramount concern.

An analysis of the Bakken Field, of North Dakota and Montana, and the Eagle Ford Field, of Texas, which together comprise more than half of projected tight oil production, reveals static field production declines of about 40 percent annually. Moreover, these fields are far from homogenous in terms of well productivity, with “sweet spots” of high productivity comprising a small proportion of the touted productive area. These sweet spots are targeted first resulting in the spectacular ramp up in production observed in these plays, but the steep decline rates inevitably take their toll. Production in the Bakken Field, which is the poster child for tight oil, has plateaued in the past few months, and requires 120 new wells each month to maintain production. The Eagle Ford is still growing rapidly, with 3000 new wells added each year, but it is only a question of time before the sweet spots are exhausted.

Tight oil is an important contributor to U.S. energy supply, but its long term sustainability is questionable. It should be not be viewed as a panacea for business-as-usual in future U.S. energy security planning.